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Tech Stocks Help Lead Rally On Wall Street

wallstreet sept27 25sep20 lt

Following the roller coast ride seen in the previous session, stocks initially showed a lack of direction during trading on Friday. Buying interest emerged over the course of the session, however, leading to a sharply higher close by the major averages.

The major averages all closed firmly in positive territory, although the tech-heavy Nasdaq outperformed its counterparts. The Nasdaq soared 241.30 points or 2.3 percent to 10,913.56, while the Dow jumped 358.52 points or 1.3 percent to 27,173.96 and the S&P 500 surged up 51.87 points or 1.6 percent to 3,298.46.

For the week, the major averages turned in a mixed performance. While the Nasdaq climbed by 1.1 percent, the Dow tumbled by 1.7 percent and the S&P 500 fell by 0.6 percent.

The strength that emerged on Wall Street came as technology stocks moved sharply higher, once again attempting to rebound from recent weakness.

Big-name tech stocks like Apple (AAPL), Amazon (AMZN) and Microsoft (MSFT) posted significant gains on the day.

The advance by Microsoft reflected substantial strength in the software sector, with the Dow Jones U.S. Software Index surging up by 2.6 percent.

Cruise line operators Norwegian Cruise Line (NCLH), Carnival (CCL), and Royal Caribbean (RCL) also saw considerable strength on the day after Barclays upgraded its rating on the stocks to Overweight from Equal Weight.

Notable strength also emerged among biotechnology and healthcare stocks, with the NYSE Arca Biotechnology Index and the Dow Jones U.S. Healthcare Index both climbing by 1.8 percent.

Within the biotech sector, Novavax (NVAX) posted a standout gain after announcing it has initiated a Phase 3 trial of its COVID-19 vaccine candidate.

Commercial real estate, airline and retail stocks also showed strong moves to the upside on the day, while oil service stocks bucked the uptrend amid a modest decrease by the price of crude oil.

Traders largely shrugged off a report from the Commerce Department showing a much smaller than expected increase in durable goods orders in the month of August.

The Commerce Department said durable goods orders rose by 0.4 percent in August after soaring by an upwardly revised 11.7 percent in July.

Economists had expected durable goods orders to surge up by 1.5 percent compared to the 11.4 percent spike that had been reported for the previous month.

Excluding a 0.5 percent increase in orders for transportation equipment, durable goods orders still climbed by 0.4 percent in August following a 3.2 jump in July. Ex-transportation orders were expected to shoot up by 1.5 percent.

Meanwhile, the report said orders for non-defense capital goods excluding aircraft, a reading on business spending, advanced by 1.8 percent in August after jumping by an upwardly revised 2.5 percent in July.

Traders also kept an eye on developments in Washington amid reports House Democrats plan to unveil a new $2.4 trillion coronavirus relief bill.

The price tag for the bill is $1 trillion less than a stimulus package the House passed back in May but may still be too high for Republicans.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index climbed by 0.5 percent, while China's Shanghai Composite Index dipped by 0.1 percent.

The major European markets also finished the day mixed. While the U.K.'s FTSE 100 Index rose by 0.3 percent, the French CAC 40 Index slid by 0.7 percent and the German DAX Index slumped by 1.1 percent.

In the bond market, treasuries closed nearly unchanged after seeing modest strength in morning trading. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 0.659 percent.

Looking Ahead

The Labor Department's monthly jobs report is likely to be in the spotlight next week, although reports on consumer confidence, pending home sales, personal income and spending and manufacturing activity may also attract attention.

Traders may also keep an eye on the first debate between President Donald Trump and Democratic nominee Joe Biden for clues about the outcome of the presidential election.

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